Rietz Comments on Accuracy of IEM

Iowa political futures markets have President George W. Bush and Democratic nominee Sen. John Kerry in a tight race, with a scant edge for Bush. Consumer confidence data indicate the GOP could hold the White House, though September numbers will be key. Several comprehensive models combining economic and political data show Bush should win about 54 percent to 57 percent of the vote. But others say a GOP victory isn't a lock. Created as a research and teaching tool by the University of Iowa's Henry B. Tippie College of Business, the Iowa Electronic Markets (IEM) have -- for period this year -- shown Kerry trailing Bush when public opinion polls have shown him ahead. Recently, the markets have tightened. Since the 1988 presidential election, the IEM has had an average election eve prediction error of 1.37 percent, outperforming many polls. "If your weatherman did that, you'd be thrilled," says THOMAS RIETZ, associate professor of finance and a director of the IEM.